THAILAND: Food and fuel price surge hits the lower and middle class

Source: IRIN

Everything is more expensive,” Somkeirt Boonna, a 35-year-old security guard who works in Thailand’s capital, told IRIN
“Not only oil but food prices are also rapidly increasing. Before the oil price started to surge, I usually spent about 4,000 baht [US$119] per month on fuel; now I have to spend 7,000 baht [$208].” Somkeirt said that with three children in school and a monthly family income of about 30,000 baht ($895), his financial situation was increasingly dire.

“We have to economise, but there’s not much we can do. I can’t cut back on my kids’ educational costs,” he said. “The best we can do is try to cut back on food expenditure. Let’s just say we have to eat less these days.”

Record high inflation

Led by high fuel and food prices, Thai inflation rose to a 10-year record 8.9 percent in June 2008, against the same month last year.

The deputy permanent secretary of the Commerce Ministry, Pairoa Sudsawarng, said the increase in fuel prices was the main factor driving last month’s inflation to a level not seen since June 1998.

Based on a basket of 373 products and services, including food and beverages, clothing, housing, medical and personal care, vehicles, transport and communication, recreation and education, the consumer price index for transport and communication and food and beverages for June 2008 increased the most – by 16.1 and 11.4 percent respectively, compared with June 2007.

Sudsawarng said the increase surpassed the ministry’s expectations. The sharp rise in the cost of living, coupled with static incomes, was squeezing poor and middle class families alike.

Rice price soars
According to the Bureau of Trade and Economic Indices of the Ministry of Commerce, the domestic price of Thai white rice typically consumed by low- and middle-income consumers increased 85.6 percent from December 2007 to June 2008.

Pan Pimsen, owner of a small restaurant in Bangkok’s Sukhumvit district, told IRIN that food sellers were suffering. The prices of key produce have almost doubled but they say they cannot pass on more than 30 percent of the increase to their diners or they lose them.

“I have sold food for 40 years here and times have never been this hard for us,” said Pan. “I have five employees working for me, and each week I struggle to pay their wages.”

Ekarat Kanto, a single, 23-year-old salesman, told IRIN his 20,000-25,000 baht ($597-746) monthly income was sufficient but he had been forced to cut back on some expenditures.

“Transportation and food cost a lot more. Although I don’t suffer as much as the poor, I have to cut down a lot on unnecessary expenditures, especially on food. I’ve stopped eating out at restaurants and increasingly use public transportation,” he said.

According to Yuttasak Supatsorn, deputy director of the National Food Institute (NFI), the food price hikes have forced most Thai people to cut their spending on food by about 30 percent, and thus reduce the amount they consume and the number of meals per day. In addition, said Yuttasak, people are purchasing and consuming less meat and other high protein products.

“Our family make a living by selling snacks, so it’s been really hard on us,” Jamnong Meenan, a snack seller on Phaya Thai Road in Bangkok, told IRIN. “People aren’t buying as many snacks as they did before.”

Aid package
On 15 July, the government announced a package of six initiatives to help poor and middle-income people. Over the next six months, the programme will cut excise charges for petrol and diesel, suspend price adjustments for household gas, and provide exemptions from water and electricity charges for households with low consumption rates.

The measures also include free bus services on half the 1,600 public buses in Bangkok and free third-class train travel nationwide. However, most observers say it is too early to tell if the initiative will be applied effectively or be of much benefit.

“I just hope that the government’s ‘six measures package’ can really help,” said Jamnong. “I don’t think that poor people like us can go on much longer if the government doesn’t do anything more about the food and oil prices.”